Category: The Chief Economist’s Note

Last week we launched our annual CE Spotlight series, which is an opportunity to step back from the day-to-day ebb and flow of the data and take an in-depth look at the key issues that will shape the outlook for the global economy and financial markets. This year we are exploring whether the world is … Continue reading “What a Spotlight on inflation past and present tells us about future risks”

The return from summer holidays is a good time to take stock of developments in the global economy. The results are not entirely encouraging.  The most obvious place to start is with the latest activity data which, generally speaking, point to a marked slowdown in the pace of recovery across the world’s major economies. This … Continue reading “Now for the hard part”

Of all the questions that hang over the post-COVID world, the most important for financial markets is whether the pandemic will mark the start of a new era of higher inflation. Yet much of the debate over inflation remains muddied and confused, and many of the important nuances between different countries are often overlooked in … Continue reading “Is this the rebirth of inflation? It’s far more complex than polarised debate suggests”

One question that increasingly comes up in client meetings is what living with COVID for the long term will entail. The truth is that there are many people that are better placed to answer this question than macroeconomists. But we are able to think through the implications for the economy. Most scientists now believe that … Continue reading “What will living with COVID for the long term mean in practice?”

Clouds are continuing to gather over the outlook for China’s economy. We’ve argued elsewhere that a slowdown in China won’t derail recoveries in other major economies. But there will be significant consequences for China itself and for investors there. We explored these in detail in a webinar last week. (Recording here.)  There are three strands … Continue reading “China’s dimming growth outlook and the end of the Golden Age”

Last week saw a flurry of second quarter GDP releases covering economies from Korea to Mexico and the US to the euro-zone. In many ways the data are already old news – they cover a period that started when many economies were still in lockdown and ended before the rapid spread of the Delta variant … Continue reading “Global growth is about to slow – understanding why is key”

There’s no shortage of issues to keep investors awake at night, but some concerns have more cause than others. The threat posed by the Delta variant shook markets at the start of last week for good reason – disruptions triggered by a major surge in cases is a key downside risk to our generally sanguine … Continue reading “China’s looming slowdown isn’t cause for global panic stations”

In England, the long-awaited day when most official social distancing rules ended dawned with the UK government’s most senior ministers self-isolating. This extraordinary situation reflects the virulence of the Delta strain; it’s now driving a renewed rise in infections worldwide and fuelling concerns about whether recoveries underway in many economies will be derailed. The honest … Continue reading “Delta variant a reminder that COVID is here for the long haul”

Anticipating policy shifts by central banks has never been easy but recent developments suggest it’s about to get more difficult – with potentially big implications for asset markets.  For the past couple of decades, central banks have set monetary policy in accordance with either an explicit or implicit target for inflation. The intellectual thrust of … Continue reading “A world of shifting central bank frameworks is a riskier one for markets”

One source of inflation concern over the past six months has been the growing evidence of supply shortages in key goods markets. These shortages have affected everything from semiconductors to household appliances, and they have fuelled fears that increases in consumer goods prices will follow.  At the heart of the problem has been the enormous … Continue reading “The end of the beginning for supply shortages?”